CHAPTER 42:04 CO-OPERATIVE SOCIETIES ARRANGEMENT OF SECTIONS PART I Preliminary

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1 SECTION CHAPTER 42:04 CO-OPERATIVE SOCIETIES ARRANGEMENT OF SECTIONS PART I Preliminary 1. Short title 2. Interpretation PART II Commissioner for Co-operative Development 3. Powers of the Minister to foster and encourage co-operative development 4. Appointment of Commissioner 5. Duties of Commissioner 6. Register of co-operative societies 7. Form of register PART III Registration 8. Societies which may be registered 9. Statement of co-operative principles 10. Application for registration 11. Name of society 12. Compulsory bye-laws 13. Requirements before registration 14. Power to request additional information 15. Registration 16. Refusal of registration 17. Provisional registration PART IV Rights and Duties of Societies 18. Societies to be bodies corporate 19. Registered address 20. Amendment by bye-laws 21. Copy of Act and bye-laws to be open to inspection 22. Register of members and officers 23. Effect and proof of entry in books of a society 24. Disposal of produce to or through society 25. Charge and set-off extended to shares and interest in capital 26. Shares and other interests not liable to attachment 27. Transfer of interest on death PART V Rights and Liabilities of Members 28. Definition of member 29. Qualifications for membership 30. Minor's contracts with societies 31. Members not to exercise rights till payment made 32. Maximum size of share holding 33. Restrictions on membership in a society 34. Voting 35. Restrictions on transfer of shares 36. Liability of past members or estate of deceased members

2 37. Withdrawal from membership 38. Removal of persons ceasing to qualify for membership 39. Expulsion 40. Nominations PART VI Management and Administration 41. General meetings 42. Provisional committee 43. First general meeting 44. Annual General Meeting 45. Business at an Annual General Meeting 46. Special General Meeting 47. Notice of general meeting 48. Proceedings at general meeting 49. Committee of management 50. Election of committee 51. Qualification for election to the committee 52. Disqualification 53. Removal from the committee by the general meeting 54. Duties of the committee 55. Authentication of documents 56. Validity of acts of the committee 57. Delegation by the committee 58. Proceedings of the committee 59. Duty of care of the committee 60. Payments to officers 61. Election of chairman, secretary and treasurer 62. Duties of chairman 63. Duties of secretary 64. Duties of treasurer 65. Duties of manager 66. Optional power to appoint a supervisory board PART VII Property and Funds 67. Creation of funds and sources of capital 68. Loans made by societies 69. Deposits and loans 70. Investment of funds 71. Restriction on capital expenditure 72. Statutory Reserve Fund 73. Distribution of net surplus 74. Commissioner's consent to payment PART VIII Accounts and Audit 75. Duty to keep accounting records 76. Records to be kept at the registered address 77. Accounting reference date 78. First accounting reference period 79. Duty of committee to prepare profit and loss account and balance sheet 80. Report by the committee 81. Annual accounts to be laid before the Annual General Meeting 82. Annual accounts to be lodged with the Commissioner

3 83. Audit 84. Nomination of external auditor 85. Fee of external auditor 86. Appointment of qualified head of audit section 87. Delegation of audit function to secondary society 88. Audit reports to members, committee and Commissioner 89. Co-operative Central Fund to replace Audit and Supervision Fund PART IX Amalgamation and Division 90. Amalgamation of societies 91. Division of a society PART X Disputes 92. Settlement of disputes 93. Case stated on question of law PART XI Liquidation 94. Liquidation 95. Liquidation due to lack of membership 96. Appointment of liquidator 97. Liquidator's powers 98. Power of Commissioner to control liquidation 99. Appeal against orders 100. Limitation of the jurisdiction of a civil court 101. Closure of liquidation 102. Cancellation of registration PART XII Powers of the Commissioner 103. Power to supply assistance 104. Commissioner may convene meetings 105. Miscellaneous powers of the Commissioner 106. Commissioner may attend meetings 107. Inspection of society 108. Discussion of inspection report 109. Investigation of a society 110. Restoration of misapplied property 111. Appointment of special officer 112. Appointment of special members 113. Removal of the committee by the Minister PART XIII General 114. Power of the Minister to make regulations 115. Power of the Minister to amend Schedules 2 and Prohibition of the use of "co-operative" or "tshwaragano" 117. Use of Setswana at Commissioner's discretion 118. Enforcement of duty to make return 119. Notice of intention to sue society 120. Offences 121. Recovery of a society's property 122. Default penalty and default fine

4 123. Exemption from liability for acts or omissions of Government officers 124. Companies Act not to apply 125. Savings Schedule 1 - Compulsory Bye-laws Schedule 2 - Proceedings at General Meetings Schedule 3 - Disputes Procedure Act 5, An Act to replace the Co-operative Societies Act of 1962 and to provide for the appointment of a Commissioner for Co-operative Development to supervise the formation, registration and management of Co-operatives and to encourage Co-operative development. [Date of Commencement: 12th May, 1989] PART I Preliminary (ss 1-2) 1. Short title This Act may be cited as the Co-operative Societies Act. 2. Interpretation In this Act unless the context otherwise requires- "accounting reference date" has the meaning given to it by section 77; "accounting reference period" has the meaning given to it by section 78; "bonus" means the share in the net surplus of a society divided amongst its members in accordance with section 73 subsection (5); "bye-laws" means the registered bye-laws made by a society in exercise of any power conferred by this Act, and includes a registered amendment of the bye-laws; "Commissioner" means the Commissioner for Co-operative Development appointed under section 4 and includes any person on whom any or all the powers of the Commissioner have been conferred in accordance with this Act; "committee" means the committee of management of a society; "Co-operative Central Fund" means the Fund established under section 89; "dividend" means a share of the net surplus of a society divided amongst its members in proportion to the share capital held by them; "honorarium" means a share in the net surplus of a society divided amongst some or all of the members of the committee, chairman, the secretary or the treasurer in consideration of their services which would not otherwise be remunerated; "legal personal representative" in relation to a person who is dead means the person who in law or in customary law, whichever may be applicable, represents the estate of that person; "officer" means the chairman, vice-chairman, secretary, treasurer, members of the committee or of any supervisory board or manager of a society and includes any employee or other person empowered under this Act, any regulations or the bye-laws of a society to give directions in regard to the business of a society or to supervise such business; "primary society" means a society whose membership is restricted to individuals; "producers society" means a society one of whose objects is the provision of paid work for its members; "school society" means a society whose membership is restricted to the pupils and staff of a school; "secondary society" means a society whose membership is restricted to societies registered under this Act; such societies may be primary societies or secondary societies or

5 both; "society" means a co-operative society registered in terms of this Act; "society with limited liability" means a society in which the liability of its members is limited by its bye-laws to- (a) the amount unpaid on the shares held by them; or such amount as they may undertake to contribute to the assets of the society in the event of its being liquidated; "society with unlimited liability" means a society the members of which are jointly and severally liable- (a) for all its obligations; and to contribute to any deficit in its assets in the event of its liquidation; "special resolution" means a resolution passed by a majority of not less than three-fourths of the members present and voting at a general meeting of which due notice has been given of the intention to propose the resolution as a special resolution and at which not less than one-half of the total membership is present. PART II Commissioner for Co-operative Development (ss 3-7) 3. Powers of the Minister to foster and encourage Co-operative development The Minister in consultation with the Commissioner shall take such measures as he may see fit for the registration and supervision of co-operative societies and for the encouragement of the development of a self-reliant co-operative movement providing for the economic interests and welfare of its members within the framework of the policies for national development. 4. Appointment of Commissioner (1) The Minister shall appoint by notice in the Gazette a Commissioner for Co-operative Development and may appoint a Deputy Commissioner and Assistant Commissioners for Co-operative Development along with such other persons as may be necessary to assist the Commissioner in carrying out the purposes of this Act; and the Minister may confer on any such persons all or any of the powers of the Commissioner under this Act. (2) Any power or duty imposed on the Commissioner by this Act may be exercised or performed by a Deputy Commissioner if- (a) the Commissioner is unable to exercise or perform that duty or power owing to illness or absence; or the Commissioner authorizes the Deputy Commissioner in writing to exercise or perform that power or duty. 5. Duties of Commissioner (1) The Commissioner shall- (a) register co-operative societies and ensure their compliance with this Act; encourage the formation of co-operative societies by providing information on co-operative principles and practice and by facilitating registration; (c) assist the organisation and efficient operation of co-operative societies; (d) provide advice and training for officers of co-operative societies, their members and employees; (e) carry out such other duties as may be assigned by this Act or the Minister. (2) The Commissioner shall present an annual report to the Minister on the operation of this Act and the societies registered under it. (3) The Commissioner may establish consultative procedures with the co-operative movement in Botswana to secure efficient co-operative development. (4) Where a secondary society has been registered under this Act which includes in its objects the provision of educational and advisory services for co-operative enterprises the Commissioner may authorize the secondary society to provide information, assistance and advice on co-operative principles and practice, and on co-operative management to facilitate the

6 registration of a proposed society and the efficient operation of existing societies. 6. Register of co-operative societies The Commissioner shall keep or cause to be kept at his office a register of co-operative societies in which shall be entered particulars relating to the registration of societies and their bye-laws, and which shall be open to inspection by the public at all reasonable times and free of charge. 7. Form of register (1) The Commissioner shall maintain such registers as may be necessary to carry out the provisions of this Act. (2) The Minister may by regulation prescribe the form in which such registers shall be maintained. (3) Until such time as any new register may be prepared and opened, the Commissioner shall continue to keep the register in use immediately prior to the commencement of this Act. PART III Registration (ss 8-17) 8. Societies which may be registered A society which has as its principal object the promotion of the economic interests of its members in accordance with co-operative principles, or a society established with the object of facilitating the operations of such a society, and complying with the provisions of this Act, may be registered under it, with or without limited liability. 9. Statement of co-operative principles For the purpose of this Act "co-operative principles" shall inter alia mean that- (a) membership is voluntary and open to all, men and women, able to use the services of the society; the services of the society are mainly provided for its members; (c) the society is democratically controlled; (d) the surplus of the society is distributed in a fair and just manner amongst its members with a limited dividend on share capital; (e) the society promotes education and training on co-operative matters for its members; (f) societies co-operate at local, national and international levels. 10. Application for registration (1) An application to register a society shall be submitted to the Commissioner on the prescribed form which shall be signed- (a) (i) in the case of a primary society that is a producers co-operative society, by at least 15 persons qualified for membership in terms of section 29; or (ii) in the case of a primary society that has as its object the promotion of thrift and the acceptance of savings from and the making of loans to its members for productive and provident purposes, by at least 50 persons qualified for membership in terms of section 29; or (iii) in the case of any other primary society, by at least 20 persons qualified for membership in terms of section 29; in the case of a secondary society by two authorized officers of at least two societies. (2) The application shall be accompanied by- (a) 3 copies of the bye-laws in English; a report on the viability of the proposed society which shall be in the prescribed form or as near thereto as circumstances permit; (c) in the case of an application relating to a secondary society, copies of the resolutions authorizing the participation of the primary societies; (d) the prescribed fee. 11. Name of society (1) No society shall be registered by a name which is identical with that of a registered

7 society, or so closely resembles such a name as to mislead members of the public as to its identity or which is, in the opinion of the Commissioner, undesirable. (2) The word "co-operative" shall form part of the name of every society and the word "limited" shall be the last word in the name of every society registered with limited liability. 12. Compulsory bye-laws The bye-laws of a society shall, inter alia, include provision for the matters detailed in Schedule 1 and shall be adequate for the efficient running of the society. 13. Requirements before registration Before registering a proposed society the Commissioner shall be satisfied that- (a) the society is a bona fide co-operative society; the name and bye-laws of the society comply with sections 11 and 12; (c) there is a reasonable expectation of benefit to the members of the society; (d) the application complies with the provisions of this Act. 14. Power to request additional information The Commissioner may request any additional information that he considers necessary about the proposed society, including- (a) the economic or other need for the establishment of the society; the number of persons expected to become members when the society begins its activities; (c) the availability of sufficient capital to be subscribed by the applicants and other persons expected to become members; (d) the availability of officers capable of managing the affairs of the society and keeping the records and accounts required for its efficient operation and for complying with this Act; (e) the educational and advisory work on co-operative principles and the operation of the society carried out amongst the applicants and the other persons expected to become members. 15. Registration (1) If the Commissioner approves the registration of the society he shall issue a certificate of registration to the society together with a copy of the bye-laws certified by him as having been approved and registered. (2) A certificate of registration signed by the Commissioner shall be conclusive evidence that the society mentioned in it is duly registered, unless it is proved that the registration of the society has been cancelled. (3) On registration the Commissioner shall supply, free of charge, a copy of this Act and any regulations made hereunder. 16. Refusal of registration (1) If the Commissioner refuses to register a society he shall give his reasons for his refusal in writing to the applicants. (2) An appeal shall lie to the Minister within one month from the date of refusal. (3) The Minister's decision on the appeal shall be final. 17. Provisional registration (1) If the Commissioner is not satisfied that a proposed society ought to be registered at the time of the application for registration but is of the opinion that steps can and will be taken with diligence, by the persons by whom or on whose behalf the application is made, to comply with all the conditions for registration, he may provisionally register the society for such period not exceeding two years and subject to such conditions as he may specify: Provided that it shall be competent for the applicants for registration of a proposed society to apply for provisional registration only. (2) A society which has been provisionally registered shall, subject to the conditions of this section and any conditions specified by the Commissioner, have all the status and powers

8 of a society registered under this Act and be entitled to operate as a society. (3) The fact that a society is provisionally registered shall be legibly stated on all documents issued by the society and on every other place where the society's name is displayed to the public. (4) The Commissioner may cancel the provisional registration of a society, without assigning any reason, by a notice in writing addressed to the society; the notice of cancellation shall operate as a refusal to register the society in terms of section 16 and from the date of service of the notice the society shall cease to be registered as a society. (5) If upon the expiry of the period for provisional registration the society has not been registered, the society shall cease to be registered as a society. (6) Where either subsection (4) or subsection (5) apply- (a) the provisions of Part XI shall operate for the settlement of the society's affairs; the Commissioner shall by notice require surrender of the certificate of provisional (c) registration to him for cancellation; the validity of any transaction by or with the society entered into prior to the cancellation or cessation of its registration shall not be affected by such cancellation or cessation. (7)(a) If at any time during the period of provisional registration the Commissioner is satisfied that the society complies with the conditions for registration and ought to be registered he may register the society under section 15 and the society shall thereupon be deemed to have been registered on the date of its provisional registration. The society shall on registration surrender the certificate of provisional registration to the Commissioner who shall then issue a certificate of registration bearing the date of registration in terms of paragraph (a). PART IV Rights and Duties of Societies (ss 18-27) 18. Societies to be bodies corporate (1) From the date of issue of the certificate of registration a society shall be a body corporate by the name under which it is registered, capable of exercising all the functions of an incorporated society having perpetual succession but with such liability on the part of its members to contribute to the assets of the society in the event of its being wound up as is mentioned in this Act. (2) All societies, primary or secondary, shall have the power to form secondary societies to facilitate their operations or to provide such other services as may be necessary for their members. 19. Registered address (1) A society shall have an address registered in accordance with this Act to which all notices and communications may be addressed; and the secretary shall, within 14 days thereof, notify the Commissioner in writing of any change in that address and the Commissioner shall record such change in the register. (2) A society shall display its name in legible letters on the outside of every place or office in which its business is carried on. (3) A society shall include its name in all business letters, notices, other official documents and publications of the society and on its common seal. 20. Amendment by bye-laws (1) A society may amend its bye-laws, including a change of name, by a special resolution of the members passed at a general meeting convened for that purpose. (2) Within 14 days from the passing of an amendment of the bye-laws, three copies of the amendment accompanied by the prescribed form shall be sent to the Commissioner who shall, subject to the provisions of subsection (3), register the amendment and the amendment shall thereupon come into effect.

9 (3) The Commissioner shall refuse to register any amendment that is, in his opinion, contrary to the provisions of this Act or regulations made hereunder. (4) If the Commissioner registers the amendment, he shall issue a certified copy of the amendment to the society, which shall be conclusive evidence of due registration. (5) If the Commissioner refuses to register an amendment, he shall record his reasons therefor and notify them to the society along with his decision. (6) The Society may appeal therefrom to the Minister within one month from the date of the decision, and the Minister's decision on such appeal shall be final. (7) An amendment which changes the name of a society shall not affect any right or obligation of the society or its members or past members, and any legal proceedings pending may be commenced or continued by or against the society under its new name. (8) A change in the registered address of a society shall not, where the address forms part of the bye-laws, be an amendment of the bye-laws. 21. Copy of Act and bye-laws to be open to inspection A society shall keep at its registered address and open inspection, without charge, by its members and the public- (a) a copy of this Act and any regulations made hereunder; a copy of its bye-laws; (c) a list of its members. 22. Register of members and officers A society shall keep- (a) a register of members in which shall be entered- (i) the name, address and occupation of each member; (ii) the date on which each person was entered in the register and the date on which any person ceased to be a member; (iii) the value of shares held by each member and the amounts paid up thereon; (iv) the nominee appointed under section 40; a register of officers showing the offices, the holders of the offices and the dates of appointment and termination of officers; (c) such other books as may be prescribed by the Commissioner. 23. Effect and proof of entry in books of a society (1) The register of members shall be evidence of any matters directed or authorized by this Act to be entered therein. (2) A copy of an entry in a book of a society regularly kept in the course of business shall, if certified in the manner prescribed in subsection (3), be received in any legal proceedings as evidence of the existence of the entry and of the matters contained in it, and shall be admissible to the same extent as the original entry. (3) A copy of an entry may be certified by a declaration, written at the foot of the copy, that it is a true copy of the entry and that the book containing the entry is still in the custody of the society; the declaration shall be signed by one committee member and the secretary of the society. (4) No officer of a society shall in any legal proceedings to which the society is not a party be compelled to produce any of the books of a society, the contents of which can be proved by a certified copy under subsections (2) and (3), or to appear as a witness to prove any matter so recorded, unless the court, for special reasons, so directs. 24. Disposal of produce to or through society (1) A society which has as one of its objects the disposal of any article produced or obtained by the work of its members, whether the produce of agriculture, animal husbandry, fisheries, forestry, handicraft, the manufacture of goods or otherwise, may either provide in its bye-laws or otherwise contract with its members- (a) that every member who produces or obtains any specified article shall dispose of the

10 whole or any specified proportion thereof to or through the society; and that any member who is proved to be in breach of the bye-law or contract shall pay as liquidated damages any sum ascertained in the manner provided for in the bye-laws. (2) Where failure to deliver such produce to the society was due to the fact that before becoming a member of the society or signing the contract with the society he had contracted to deliver such produce to another and the prior contract was disclosed to the society when applying for membership or signing the contract, such failure shall not be a breach within the meaning of subsection (1). (3) No bye-laws or contract entered into under the provisions of subsection (1) shall be contested in any court or other proceedings on the ground only that it constitutes restraint of trade. 25. Charge and set-off extended to shares and interest in capital A society shall have a charge upon and be entitled to set off any debt due from any member, past member or deceased member against any share in the society's capital or any deposit made by or dividend due to that person. 26. Shares and other interests not liable to attachment Subject to the provisions of section 25, the shares or other interests of a member in the capital of a society shall not be liable to attachment or sale under decree or order of any court in respect of any debt or liability incurred by the member; and neither his trustee nor his assignee in insolvency nor a curator bonis duly appointed shall have any claim on the shares or other interests. 27. Transfer of interest on death (1) On the death of a member a society may either- (a) transfer the membership and share or interest in the capital of the society belonging to the deceased member to the person nominated under section 4; or pay to the nominee, or if there is no person so nominated, to the legal personal representative of the deceased member, a sum representing the value of the member's share or other interest in the capital of the society ascertained in accordance with any regulations or the bye-laws of the society: Provided that- (i) in the case of a society with unlimited liability the nominee or legal representative, as the case may be, may require payment by the society of the value of the share in the capital of the society of the deceased member ascertained as aforesaid; and (ii) in the case of a society with limited liability the society may transfer the membership and share or other interest in the capital of the society of the deceased member to such nominee if the nominee is qualified in accordance with the bye-laws of the society for membership of the society, or on his application within six months of the death of the deceased member to any person specified in the application who is so qualified. (2) A society shall pay all other monies due to the deceased member to his legal personal representative. (3) All transfers and payments made by a society under this section shall be valid against any demand made on the society by any other person. PART V Rights and Liabilities of Members (ss 28-40) 28. Definition of member (1) The first members of a society shall be those persons who sign the application for registration and have agreed to become and become members on the registration of the society. (2) Every other person whose application for membership has been accepted by the committee and who has signed the register of members shall be a member of the society.

11 (3) A person whose application for membership has been rejected by the committee may appeal to the next general meeting of the society and if such application is accepted by a two-thirds majority of the members present and voting at that meeting, such person shall be a member of the society. 29. Qualifications for membership (1) To be qualified for membership of a primary society a person must- (a) have attained the age of- (i) five years in the case of a school society; or (ii) eighteen years in the case of any other society; and be resident or employed within or be in occupation of land within the society's area of operation as described in its bye-laws. (2) No society, company or other association, incorporated or not, shall be a member of a primary society. (3) Membership of secondary societies is restricted to societies registered under this Act. 30. Minor's contracts with societies Where a person, who has attained the age of 18 years but has not yet attained the age of majority, becomes a member of a society, he shall for the purpose of contracting with the society be taken to be of full legal capacity in so far as age is concerned: Provided that in the case of a school society no pupil shall be registered as a member without the prior written consent of his parent or guardian and the head of the school and in that case this section shall apply as if 5 were substituted for Members not to exercise rights till payment made No member of a society shall exercise the rights of a member unless he has paid such membership fee and acquired such share in the capital of the society as may be set out in its bye-laws. 32. Maximum size of share holding No member of a primary society shall hold more than one-fifth of the share capital of that society. 33. Restrictions on membership in a society Except with the written consent of the Commissioner, no person shall be a member of more than one society which has as one of its objects the granting of loans to its members. 34. Voting (1) Each member of a primary society shall have one vote in the affairs of the society and shall vote in person and not by proxy. (2) Each member of a secondary society shall have such voting rights as may be prescribed by the secondary society's bye-laws and may, subject to such bye-laws, appoint any number of delegates not exceeding the number of votes allocated to exercise its voting rights. (3) In the case of an equality of votes, the Chairman of the meeting shall have a casting vote in addition to his original vote. 35. Restrictions on transfer of shares (1) The transfer of the share of a member, past member or deceased member in the capital of a society shall be subject to the conditions of maximum holding in section 32. (2) In the case of a society registered without limited liability a member shall not transfer any share held by him in the society unless- (a) he has held such share for not less than one year; or the transfer is made to the society, or to a member of the society or to a person whose application for membership has been accepted by the society. 36. Liability of past members or estate of deceased members The liability of a past member or the estate of a deceased member shall be limited to those liabilities which existed at the date of termination of membership and shall cease on the expiry of one year commencing on that date.

12 37. Withdrawal from membership A member may withdraw from a society by giving such notice as may be prescribed by its bye-laws. 38. Removal of persons ceasing to qualify for membership Following a resolution of the committee the name of a member who ceases to qualify for membership under section 29 shall be struck from the register of members, and he shall cease to be a member from that date. 39. Expulsion (1) The bye-laws of a society may provide for the expulsion by special resolution of a member who has persistently contravened the provisions of this Act, any regulations or the bye-laws. (2) Any bye-law authorized by this section shall require any complaint against a member to be made to the committee in writing; and the committee may resolve to accept the complaint and recommend to the general meeting that the member be expelled. Special notice of at least 14 days must be given to the member concerned containing- (a) the time, date and place of the general meeting; (c) a copy of the complaint against him and the recommendation of the committee; details of his right to attend the general meeting and state any reason or make any submission as to why he should not be expelled. 40. Nominations (1) On admission to a society a member may nominate one person to whom his membership and shares or other interests in the capital of the society may be transferred on his death. (2) A member may at any time cancel the nomination made under subsection (1) or substitute another person as nominee in place of the person nominated under subsection (1). (3) Any nomination or change in nomination shall be in writing and signed by the member in the presence of two attesting witnessess, and shall be recorded in the register of members. PART VI Management and Administration (ss 41-66) 41. General meetings The authority of the members as joint owners of the society is vested in the general meeting of members and subject to section 31 every member shall have the right to attend, speak and vote at every general meeting. 42. Provisional committee The first 10 subscribers to the application for registration, or, if there are less than 10, all of the subscribers to that application, shall form a provisional committee, with one of their number elected to act as secretary/treasurer, and such committee shall have power to- (a) admit applicants to membership of the society and to receive share subscriptions and membership fees; to do all things necessary to convene the first general meeting of the members as provided for in section First general meeting The first general meeting shall be held within two months of the date of the society's certificate of registration and the members present shall, under the chairmanship of a co-operative officer- (a) elect a committee of management and such other officers as this Act or the bye-laws may require to serve until the first Annual General Meeting; receive and consider any reports and decide any matters as may be necessary for the conduct of the society in the ensuing financial year. 44. Annual General Meeting

13 A society shall provide in its bye-laws for an Annual General Meeting to be convened by the committee and to be held as soon as practicable but not later than 6 months after the end of each financial year. 45. Business at an Annual General Meeting (1) The ordinary business of the Annual General Meeting shall be- (a) to approve the minutes of the last general meeting of the society and of any other general meeting not previously approved; to consider and approve the reports from the auditors and any report or recommendation of the Commissioner; (c) to approve the accounts; (d) to decide the manner in which any available surplus shall be invested or distributed in accordance with the bye-laws; (e) (f) to elect the committee and officers for the ensuing year; to decide or review any maximum borrowing limit as required by law. (2) The Annual General Meeting may transact any other business within its authority of which due notice has been given to the members. 46. Special General Meeting (1) A Special General Meeting may be convened at any time by the committee. (2)(a) A Special General Meeting shall be convened by the committee on receipt of a written requisition signed by at least one-fifth or twenty of the members, whichever is the lesser, stating the objects of the meeting. If the committee fails to convene the meeting requisitioned under paragraph (a) within one month of receipt of the requisition, the members who have signed the requisition shall have power to convene the meeting themselves by notice to the members stating the objects of the meeting and that the committee has failed to convene a meeting. 47. Notice of general meeting All general meetings shall be convened after at least 14 clear days notice thereof has been given to members and a copy of this notice shall be sent to the Commissioner. 48. Proceedings at general meeting Unless the bye-laws have alternative provisions for notice, quorum and proceedings at general meetings the provisions of Schedule 2 shall apply thereto. 49. Committee of management A society shall have a committee consisting- (a) in the case of a producers co-operative society of at least 3 members; or in the case of any other society of at least 5 members. 50. Election of committee (1) Subject to section 42 the first committee members shall be elected at the inaugural general meeting held under section 43; at the first Annual General Meeting they shall be replaced by the persons elected thereat. (2) At the Annual General Meeting in every subsequent year one-third of the then members of the committee shall retire from office, or if their number is not three or a multiple of three the number next below one-third shall retire. (3) The Commissioner or his representative present under section 106 may conduct the election of committee members and of any officers elected by the members. (4) The committee members to retire each year shall be those who have been longest in office since their last election, but between persons who became committee members on the same day those to retire, unless they otherwise agree among themselves, shall be determined by lot. (5) A retiring committee member may stand for re-election: Provided, however, that a committee member who has served for two consecutive three year terms shall not be eligible for re-election for a third consecutive term during the period of 2

14 years from the date of his last vacation of office. (6) If a general meeting removes a committee member it shall elect a new member to hold office till the next Annual General Meeting. 51. Qualification for election to the committee (1) To be qualified for election to the committee a person shall be a member of the society and 21 years of age or more. (2) A member shall be disqualified from being elected to the committee if- (a) except in a producers co-operative society, he is in receipt of a salary or payment from the society other than an honorarium authorized by section 60; he is carrying on for his private profit any trade or business in which the society is engaged; (c) he has, within 5 years immediately preceding such election, been convicted of any offence under this Act or any regulations made hereunder or of any offence involving dishonesty or has been imprisoned for 6 months or more without the option of a fine; (d) he has been removed by a court from an office of trust on account of misconduct; (e) he is an unrehabilitated insolvent. 52. Disqualification A committee member shall cease to hold office if- (a) he resigns by notice in writing; except in a producers co-operative society, he accepts any salary or payment from the society other than an honorarium authorized by section 60; (c) he is convicted of any offence under this Act or any regulations made hereunder or of any offence involving dishonesty or suffers lawful imprisonment for 6 months or more; (d) he is removed by the court from any office of trust on account of misconduct; (e) he becomes of unsound mind; (f) he becomes insolvent or makes any arrangement or composition with his creditors generally; (g) he is disqualified for any other reason specified in the bye-laws; or (h) he has ceased to reside within the society's areas of operation for 6 months or more. 53. Removal from the committee by the general meeting A society may remove any committee member before the expiration of his term of office by a resolution of its members passed at a general meeting after due notice of the intention to propose the resolution has been given to its members. 54. Duties of the committee (1) The committee shall be responsible for the direction and supervision of the business of the society and, subject to this Act, any regulations, the bye-laws and any directions given by a general meeting, may exercise all the powers of the society that are not reserved to the general meeting. (2) Without restricting the generality of subsection (1) the committee shall- (a) consider and decide all applications for membership of the society; call for and examine reports from all officers of the society which disclose the true position of the society, its operations and financial position; (c) open and operate bank accounts and ensure that all cheques are properly signed and countersigned after production of supporting vouchers sufficient to explain the underlying transactions and establish that they are in accordance with the resolutions of the committee; (d) (e) in conformity with section 69 exercise the borrowing powers of the society; keep the members informed of the progress of the society, encourage interest and a sense of ownership on the part of the members and have charge of the educational and advisory work amongst the members on co-operative principles and practice and the operation of the society.

15 (3) A full and accurate record shall be kept of all proceedings of the committee and any sub-committee and the records shall be available for inspection by or under the direction of the Commissioner and by the auditor. (4) The committee may appoint, on such terms as it thinks fit, a manager to carry out the affairs of the society and may employ such other persons as the committee considers necessary to assist the manager. (5) The committee may at any time suspend or remove the secretary, treasurer or manager for irregularity in the performance his duties. 55. Authentication of documents Except as otherwise provided, any document requiring authentication by a society shall be authenticated in the manner prescribed in its bye-laws; and where no such manner is prescribed it shall be signed by one committee member and the secretary. 56. Validity of acts of the committee The acts of any committee member or officer of a society shall be valid notwithstanding any defect that may afterwards be discovered in his appointment. 57. Delegation by the committee (1) The committee may delegate any of its duties to a sub-committee or to an officer of the society. (2) Nothing in subsection (1) shall be taken to absolve the committee from its supervisory duties and from its responsibility for the proper conduct and direction of the affairs of the society. 58. Proceedings of the committee (1) The committee shall meet whenever the affairs of the society so require and in any case not less frequently than once each month. (2) In the absence of contrary provisions in the bye-laws- (a) the quorum for a meeting of the committee shall be half the number of its members; decisions shall be taken by a simple majority of votes, and the chairman shall have no (c) casting vote; the chairman shall be responsible for the proper conduct of the business of the committee in accordance with any standing orders it may adopt. 59. Duty of care of the committee In the conduct of the affairs of a society the members of the committee shall exercise the prudence and diligence of ordinary men of business and shall be jointly and severally liable for any losses sustained through any of their actions which are contrary to this Act, any regulations, the bye-laws or the directions of the general meeting: Provided that if in any proceedings to recover from a person mentioned in this section any amount for which he is liable, it appears that he has acted honestly and reasonably and ought fairly to be excused in whole or in part he may be relieved wholly or partly from personal liability. 60. Payments to officers (1) Except in a producers co-operative society no member of the committee shall hold any office of profit in the society. (2) The bye-laws may provide for the chairman or a member of the committee, or the secretary or treasurer, if not otherwise receiving an allowance or salary, to receive an honorarium from the society. (3) Notwithstanding section 52, and subsections (1) and (2) of this section, a committee member shall be entitled to recover out of pocket expenses, incurred with the specific approval of the committee in connection with the affairs of the society. 61. Election of chairman, secretary and treasurer (1) Every society shall have a chairman, a secretary and a treasurer, or a secretary-treasurer, elected from among the committee members in the manner provided for in

16 the bye-laws. (2) If the committee appoints a person as manager of the society's business, any of the duties of secretary or treasurer may be delegated to the manager and where all the duties are so delegated the society may operate with the manager acting as secretary-treasurer of the society: Provided, however that the manager shall not thereby become a committee member nor be entitled to vote at meetings of the committee. 62. Duties of chairman (1) The chairman shall preside at all general meetings and all meetings of the committee and shall perform the other duties conferred upon him by the bye-laws. (2) In the absence of the chairman, his duties shall be carried out by any vice-chairman whose appointment is authorized by the bye-laws or in the absence of a vice-chairman by one of the committee members elected by the committee. 63. Duties of secretary The secretary shall serve the society on a regular basis and shall carry out the duties conferred upon him by the bye-laws including the duty- (a) to maintain accurate and up-to-date registers, books and other papers of the society; to summon and attend general meetings and committee meetings and to record the proceedings in the minute book; (c) to conduct and sign correspondence on behalf of the committee. 64. Duties of treasurer The treasurer shall serve the society on a regular basis and shall carry out the duties conferred upon him in the bye-laws including the duty- (a) to maintain accurate and up-to-date accounts and accounting records for the society; to take charge of all financial transactions of the society and to ensure the safe-keeping (c) of the society's funds; to prepare or cause to be prepared all necessary receipts, vouchers and accounts required by this Act, the regulations and the bye-laws. 65. Duties of manager (1) The duties of the manager shall be specified in the bye-laws and by any resolutions of the committee delegating to him any particular functions. (2) Where the duties of secretary or treasurer are partially delegated to the manager under section 61 the duties of these officers may be modified accordingly. 66. Optional power to appoint a supervisory board (1) The bye-laws of the society may provide for the election by the members of a supervisory board to be responsible to the members of the society for ensuring that the affairs of the society are conducted in accordance with this Act, any regulations, the bye-laws and any directions of the general meeting. (2) Such bye-laws shall provide for the election, functions, proceedings and term of office of the supervisory board and its members and in particular shall- (a) disqualify any committee member from election to the supervisory board; confer a right of access to all books, accounting records and documents of the society and the committee and the right to require information or explanation from any officer or employee of the society. PART VII Property and Funds (ss 67-74) 67. Creation of funds and sources of capital (1) The capital of a society which shall be devoted only to the carrying out of the objects of the society, the administration of the society and any other purpose authorized by this Act, any regulations or its bye-laws, may be raised from- (a) membership fees;

17 (c) (d) (e) (a) (c) payments for shares; savings deposits from members; surplus carried to reserve funds; and loans or deposits from non-members. (2) Subsection (1) is subject to the followingno membership fees shall be refunded except where an application for admission is refused; no share may be redeemed except in accordance with the bye-laws and subject to the minimum shareholding specified therein; savings deposits shall be made and may be withdrawn in accordance with the bye-laws of the society; (d) the Statutory Reserve Fund shall be kept and used in accordance with section 72; (e) loans and deposits from non-members shall be subject to section Loans made by societies (1) A society shall not make a loan to any person who is not a member: Provided that a society may with the consent of the Commissioner make loans to another society or person specified by the Commissioner or to other societies or persons generally. (2) Except with the permission of the Commissioner a society shall not lend money on the security of any movable property other than produce or goods in which the society is authorized to deal. (3) The Minister may by regulation prohibit or restrict the lending of money on a mortgage on any particular description of immovable property by any society. 69. Deposits and loans (1) A society's bye-laws may contain provisions authorizing the society to receive loans and deposits from members and from non-members; any such bye-laws shall also provide that the general meeting shall set down the maximum amount of loans, deposits and bank overdrafts that may be outstanding at any time. (2) Notification of the maximum so fixed shall be sent to the Commissioner within 14 days, and that maximum shall be subject to the approval of the Commissioner who may at any time reduce it or impose such conditions as he may consider necessary, and his decision thereon shall be final. 70. Investment of funds A society may invest or deposit its funds (a) in the Botswana Co-operative Bank Limited or with any other bank authorized under the Banking Act or the Post Office Savings Bank of Botswana; or with any other registered society approved for the purpose by the Commissioner; or (c) in any security issued or guaranteed by the Government of Botswana; or (d) in any other manner approved by the Minister by regulations under this Act. 71. Restriction on capital expenditure (1) A society shall not utilise its funds for capital expenditure, such as the acquisition of land, buildings, vehicles, plant or machinery, in a sum exceeding the prescribed limit without first obtaining the written approval of the Minister. (2) The prescribed limit shall be P3 000 or such other figure as the Minister may by regulation prescribe providing that the Minister may prescribe different limits for different classes of societies. 72. Statutory Reserve Fund (1) Every society shall establish a Statutory Reserve Fund which shall be indivisible and in which no member shall be entitled to claim a specified share. (2) A society shall pay into the Statutory Reserve Fund at the end of each financial year at least twenty-five percent of the net surplus shown in the audited annual accounts.

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